Technicals

WHAT LIES AHEAD : NEAR-TERM PICTURE 

SPOT NIFTY : 

Indian benchmark index Nifty finally breached its multiple resistance at 10630 with a gap-up opening on April 27. However, the price movement did not support the rise in volumes and oscillators heading northwards. Nifty witnessed a pullback soon, led by sectoral and stock-specific declines, as if for a pullback up to the resistance-turned-support level. The 2.5% recovery in the Bankex during the period offset the fall in IT, metal and realty stocks. Nifty, and specifically Sensex, which outperformed Nifty also, together outperformed the broader markets. However, the negative bias refrained the markets from gaining ground. Going forward, if Nifty continues to correct some more with extended pull-back, we hold 10650-10620 as immediate supports, followed by 10535-10515. On a weekly basis, it is a correction after five consecutive upticks for the Nifty. Hence, 10470-10370 will act as medium term supports. However, if the recent correction is just a breather, we may see a bounce back in the next week, and above the levels of 10750-10785, we hold 10850-10950 as the next resistances for the Nifty. 

We suggest traders to remain cautious of the results of frontline counters, as extreme volatility in the frontliners would impact Nifty's intra-day movements in the coming sessions. 

NIFTY DERIVATIVES: 

The Indian Volatility Index (VIX), a gauge for the market’s short-term expectation of volatility, gained 1.09 per cent and settled at 12.98. Nifty May 2018 futures closed at 10699.80 at a premium of 20.15 points over the spot closing of 10679.65. Nifty June 2018 futures closed at 10708.95 at a premium of 29.3 points over spot closing of 10679.65. The Nifty Put Call Ratio (PCR) Open Interest-wise stood at 1.20 for May month contract. 

Among Nifty Calls, 10,800 Strike Price from the May month expiry was the most active Call. Among Nifty Puts, 10,700 Strike Price from the May month expiry was the most active Put. The maximum OI outstanding for Calls was at 11,000 strike price and for Puts, it was at 10,500 strike price. 

LEGEND :
EMA – Exponential Moving Average.
MACD – Moving Average Convergence Divergence
RSI – Relative Strength Index 

STOCK STRATEGY 

UJJIVAN FINANCIAL SERVICES.......... BUY............ CMP Rs 421 

BSE Code ...... 539874
Target 1 .... Rs 460
Target 2 .... Rs 470
Stoploss ... Rs 383(CLS) 

✓ Current Observation:The stock, after registering a high of Rs 484.90 in the month of October 2016, entered into a correction phase and made a low of Rs 284.85 in the month of December 2016. Thereafter, the stock retraced about 88 per cent of the entire downward move and again entered into a corrective phase, and this time around, the stock halted its correction around the level of Rs 290. This led to a formation of strong base in the range of Rs 284-290. 

✓ At present, on the weekly time frame, the stock has witnessed breakout of its multiple touch point trendline. 

✓ The stock is trading above its 100 and 200-day EMAs, which is positive for the stock. The RSI on the weekly time frame is on a rising trajectory and has moved above the 60-mark. The level of Rs 383 is likely to act as a strong support and this could be maintained as a stop loss for long positions. On the upside, the stock is likely to touch the levels of Rs 460-470 

✓ Conclusion: Considering the breakout of multiple touch point trendline and the RSI quoting above the 60 level on the weekly time frame, we recommend buying this stock for a target price of Rs 460-470, with a stop loss at the level of Rs 383 

REVIEW OF STOCK STRATEGY 

We had recommended our readers to buy the stock of Tata Global Beverages Ltd at Rs 290.90 in issue no. 28 (dated April 30, 2018). Post our recommendation, the stock has moved in line with our expectation and touched the high of almost Rs 300, but the stock has retreated from the higher levels as volatility crept into the broader market. The stock is still trading above its 100-day EMA level. The technical parameters of the stock still look promising. We would advise our readers to hold this stock with a stop loss of Rs 277 as it is likely to move higher from the current levels